Field yet to be levelled

Last Friday, nearly two months after the Remuneration and Other Legislation Amendments Act came into effect on August 5, the Remuneration Tribunal issued a statement acknowledging it now had the power to set politicians’ base pay.

This, as we envisaged last week, set off a flurry of new “fat cat" headlines and predictions of massive one-off pay rises for much-despised politicians.

Actually, the tribunal did not so much “issue" a statement as pop it on its website in a not very prominent spot.

But more needs to be changed, even though the now-consolidated Remuneration Tribunal Act 1973 is up there for anyone who dares try to read it and stay awake.

At time of writing, for example, the website still says, “all tribunal determinations are disallowable instruments".

That is no longer true. Determinations on federal politicians’ and department secretaries’ pay are not disallowable by the parliament under the new legislation.

It is one reason why politicians could (and did) line up over the last week to make virtuous comments along the lines of, “The tribunal’s decisions are independent and we’ll just have to put up with a pay rise but we’re not really in it for the money".

And of course they aren’t in it for the money, especially if the point of comparison is the pay of captains of industry. They are in it for the power.

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But industry isn’t the point of comparison, and nor should the pay of senior public servants – which has been a comparator for politicians’ pay – be linked to chief executive officers of big business either.

That’s not to say politicians shouldn’t be paid better.

It’s getting all their pay, and that of department secretaries, on to a better footing that is the difficulty. Don’t expect a quick fix despite the tribunal’s extended powers.

Its website, by the way, also still says it “advises" the prime minister on pay for secretaries, when in fact it now sets it, with decisions made by the secretary of the Department of the Prime Minister and Cabinet, [PM&C]
Ian Watt
, about what to pay those other than himself and Treasury secretary Martin Parkinson, to be taken as (non-disallowable) tribunal determinations.

In last Friday’s statement on politicians’ pay, the tribunal reiterated that parliamentary entitlements should have two streams: remuneration (personal financial benefit) and business expenses (costs of their duties).

“This will require comprehensive review; such a review will take time," it said.

It was already conducting, with a consultant, an assessment of back-benchers’ work, to establish a “defensible basis" for assessing remuneration and to set a benchmark. (Assessing “work value" is currently all the rage, and a fruitful field for consultants.)

The tribunal expected to make “an initial report on parliamentary remuneration towards the end of 2011".

And the tribunal doesn’t usually move quick smart. It still hasn’t released the second part of its report on secretaries’ pay, although the preliminary report was issued in March, 2010.

To be fair, there has been a lot of water under the bridge since then – the amendments act, a new PM&C secretary, and Treasurer Wayne Swan’s move to reduce the next Reserve Bank of Australia governor’s pay from $1.08 million to $850,000.

The tribunal has already said the governor’s pay is “highly relevant" to the secretaries’ pay, so go figure.

As we have reported, it also awarded massive pay rises to the three economic regulators in August and has yet to announce comparable rises for the five “specified statutory officers".

It is pretty obvious that none of the above officials should be earning more than department secretaries or, for that matter, than the prime minister and senior ministers.

It’s getting them all to parity that is the problem.

In its 2010 review of secretaries, the tribunal suggested its final recommendation would address three things: an initial “reasonable adjustment" of pay for existing secretaries; a longer-term pay structure entailing levels of remuneration “expected to be substantially above the current level"; and a “transition path" contingent upon certain criteria, designed to prevent windfall gains, including superannuation, for existing secretaries.

So, no one-off big bang for the mandarins.

Since then, as we have also reported, the Prime Minister,
Julia Gillard
, has awarded them two pay rises (4 per cent in October, 2010 and another 3 per cent on June 30).

But wait, there’s more, though no bonus holiday in Fiji.

The tribunal also amended its determination on parliamentary entitlements last week.

Principally, it extended the “resettlement allowance" for parliamentarians who retire “involuntarily" and intend to seek employment.

They’ll get three months’ basic pay instead of the previous 12 weeks and a new, extra three months’ pay if they served a full term in either house or three years in the Senate.

So, another incremental fix.

If only the tribunal would simply set up a single, transparent pay structure for all politicians and senior officials, index the lot, announce it, suffer the slings and arrows – including from the Community and Public Sector Union – and allow them to keep the outrageous fortune. But there go those pigs again, flying past the window.